Donald Trump was elected president of the United States, staging a historic upset against former Secretary of State Hillary Clinton. For Brazil, this could mean bad news regardless of your political views. As the votes started rolling Trump’s way, stock markets across the globe plunged due to the fear of Trump’s anti-free trade agenda. The Republican’s victory could cause problems for the recovery of Brazil’s economy. Early on Wednesday, Brazil’s currency, the Real, tumbled 2 percent after having gained nearly 24 percent in value this year.
Trump’s election has also had a negative impact on Brazil’s stock market. The BM&F Bovespa index, Brazil’s stock exchange, had risen 50 percent between January and October. Last week, though, it dropped 5.1 percent – and Petrobras’ shares lost 6 percent of its market value. All because of the “Trump risk.”
Before the markets opened, the Brazilian Central Bank announced that it would cancel an auction of up to $250 million worth of reverse currency swaps scheduled for the day, without offering an explanation.
We don’t know quite just yet how Donald Trump’s administration will impact Brazil. “The biggest problem for us, right now, is the uncertainty created by his victory,” posits Fernando Brancoli, a professor of international relations at Fundação Getulio Vargas. “Hillary Clinton was more open to free-trade deals; we knew what to expect from her.”
Notwithstanding the stock market results, Pedro Vartanian, a professor of economics at Mackenzie University, doesn’t believe that Trump’s election will have a major impact in trading deals between Brazil and the United States. “Regardless of who their president is, we don’t have much access to the American market,” he says. “Right now, all we can do is wait and see if he will fulfill promises like toughening the relationship with China.”
There is also the issue of immigration. There are currently 1.3 million Brazilians living in the United States – and most of them are undocumented. If Trump keeps his promises of mass deportations, it could severely impact those immigrants.
The Trump trend could spread around Latin America, and especially in Brazil. “People are tired of the establishment, and these individuals who describe themselves as ‘outsiders,’ even when they’re not, are capitalizing,” says Professor Fernando Brancoli. Brazil’s recent municipal elections showed the strength of this phenomenon when São Paulo elected, in the first-round election, a businessman with limited political experience. Does that ring any bells?
Brazilian Congressman Jair Bolsonaro celebrated the result. On Twitter, he declared: “The victory goes to the man who fought ‘everyone and everything.’ In 2018, Brazil will follow the same path.”
It might actually happen. Bolsonaro, a man who gained notoriety for his racist, homophobic rants, is polling at 10 percent for the presidential race. He is the candidate preferred by 25 percent of wealthy Brazilians. The question is, after Trump’s win, can we doubt such results?
Source: plus55.com